Gov. Abbott leaves door open for sales or property tax cut

Updated 4:54 pm, Wednesday, April 15, 2015

AUSTIN – Gov. Greg Abbott refused Wednesday to take sides in a battle between House and Senate leaders over whether it's better to cut sales taxes or give a bigger homestead exemption from school property taxes.

Abbott, who in his state of the state speech said he would insist on property tax relief, said he still believes Texans need property tax relief. He also reiterated his promise to veto the budget if lawmakers don't reduce the state business tax.

But he declined to extend that veto threat to prod lawmakers toward property-tax relief.

"The only veto declaration I've made clear is I will veto any budget that does not include the margins tax," Abbott said in response to reporters' questions at a news conference. "With regard to the veto word, I don't want to go throwing that out there loosely. I've thrown down my one veto threat. I'll leave it at that right now."

Abbott said that's because the House and Senate should be able "to work toward what they consider to be the best solutions for reducing taxes in this state."

There is support in both the House and Senate for business-tax relief. The Senate has backed a 15 percent rate business-tax reduction, coupled with a plan to exempt more small businesses from the tax. Texas House Ways and Means Chairman Dennis Bonnen, R-Angleton, has proposed a 25 percent rate cut in the business tax.

The big battle is over property taxes versus sales taxes.

The Senate has approved a bigger homestead exemption from school property taxes. Lt. Gov. Dan Patrick, who presides over the chamber, campaigned on providing property tax relief and has indicated he'll insist on it.

"I'm looking for tax reductions that will lead to the greatest job growth stimulation," Abbott said. "Reducing the business franchise does lead to job creation. I'm looking to the extent to which a reduction in property taxes or a reduction in sales taxes may also lead to job creation."

Patrick, however, said he plans to hold firm on tax relief. He cited Abbott's state of the state speech, saying he continues to stand "shoulder to shoulder" with the governor.

"I agree with Gov Abbott that I too will not support any budget that does not have franchise tax relief. I also will not support any budget that does not have property tax relief as well," Patrick said in a statement.

Bonnen said he's working "closely" with Abbott on the issue, adding that his plan provides "a tax cut for every Texan, including every employer" and noting its support from business.

"I appreciate Governor Abbott's leadership on cutting taxes, and agree with his goal to pass tax relief that generates economic activity and job creation," Bonnen said in a statement. "I am working closely with Governor Abbott to pass a tax cut that creates jobs, that is permanent, and that benefits every Texan."

House Speaker Joe Straus, R-San Antonio, said, ""I'm certain the House and Senate will work well together in the final weeks of the session."